If you've freelanced at all before, you probably already know: there are no guaranteed paychecks in freelance writing. I often tell my family and friends, particularly those who dream up things for me to do during work hours, that my pay is tied directly to my productivity. I don’t write, I don’t get paid. It’s not like a desk job where you clock in, stay for awhile, get paid for the hours you were on the clock. And certainly not like a salary position, where you’re paid the same amount every payday almost regardless of the amount of work you completed.
Since we're not guaranteed a paycheck, not in the same way as people with an employer, our money management has to be different. I became serious about my finances very early.
Know Your Money, Don't Leave Anything to Chance
We have to know the amount we need to live on each month, i.e. your total monthly expenses. Of course, this is something everyone should know, but for self-employed people it’s important because that number is the basis of your monthly income goal. If your expenses are $3,000 each month, then you know you need to do at least $3,000 worth of work that month.
Living month to month is risky for me, so I try to earn prior to that month or at least a couple of weeks before certain expenses are due.
Because we’re not on anyone’s payroll, payments sometimes come later than expected. Never rule out the possibility that someone could stiff you for payment all together.
You may have some recurring projects that are relatively guaranteed. Factor those into your monthly income expectations, but remember that clients can quit anytime, sometimes they won't warn you in advance.
You should also be aware of what's in your checking and savings accounts and how much money has already been allocated to other things.
That our next paychecks aren’t guaranteed means we need a reliable safety net. In other words, we need to have money in the bank that we can pull from when clients pay late or we don’t make as much money as we expected.
Always know how to drum up more work if your clients leave you or your expenses increase. For example, I have a list of websites in my niche to send out pitches to whenever I'm looking for additional work.
...But Not the Wrong Kind of Backup
It’s important not to use debt as income. When times are tough, try to rough it rather than use credit cards or loans to pull you through. Debt balances increase your monthly expenses and require you to earn more money to meet your monthly obligations. You’ll find yourself working even harder just to pay off debt. The less debt you have, the less stressful, financially at least, your freelance life will be.
In my opinion, the money management part of freelance writing is one of the most important factors in having a long career. You may be the best writer, have an influx of clients, but if you don't know how to manage the pay irregularities, you'll struggle. Get that part under control and you can freelance as long as people will hire you.